Expedia 2008 Annual Report Download - page 108

In May 2006, the airplane was placed in service and is being depreciated over 10 years. As of December 31,
2008 and 2007, the net basis in our ownership interest was $18 million and $19 million recorded in Long-term
investments and other assets. In 2008 and 2007, operating and maintenance costs paid directly to the jointly-
owned subsidiary for the airplane were $400,000 for both periods.
On August 20, 2008, IAC completed its plan to separate into five publicly traded companies. With this
separation, we expect our related party transactions with the newly constituted IAC to be immaterial on a go-
forward basis. In 2008, we paid $4 million to IAC businesses. In 2007, we received $100,000 from IAC
businesses, and paid $8 million to IAC businesses. In 2006, we received $2 million from IAC businesses, and
paid $31 million to IAC businesses.
In the fourth quarter of 2006, eLong sold one of its businesses to a subsidiary of IAC for approximately
$15 million.
NOTE 16 — Segment Information
We have two reportable segments: North America and Europe. We determined our segments based on
how our chief operating decision makers manage our business, make operating decisions and evaluate
operating performance. Our primary operating metric for evaluating segment performance is “Operating
Income Before Amortization” (OIBA as defined below), which includes allocations of certain expenses,
primarily cost of revenue and facilities, to the segments. We base the allocations primarily on transaction
volumes and other usage metrics; this methodology is periodically evaluated and may change. We do not
allocate certain shared expenses such as partner services, product development, accounting, human resources
and legal to our reportable segments. We include these expenses in Corporate and Other.
Our North America segment provides a full range of travel and/or advertising services to customers
primarily located in the United States, Canada and Mexico. This segment operates through a variety of brands
including Classic Vacations, Expedia.com, hotels.com, Hotwire.com and the TripAdvisor Media Network. Our
Europe segment provides travel services primarily through localized Expedia websites in Austria, Belgium,
Denmark, France, Germany, Ireland, Italy, the Netherlands, Norway, Spain, Sweden and the United Kingdom,
as well as localized versions of hotels.com in various European countries. In addition, Venere is included
within our Europe segment from its acquisition date in the third quarter of 2008 forward.
Corporate and Other includes Egencia, Expedia Asia Pacific and unallocated corporate functions and
expenses. Egencia provides travel products and services to corporate customers in North America, Europe and
the Asia Pacific region. Expedia Asia Pacific provides online travel information and reservation services
primarily through eLong in China, localized Expedia websites in Australia, India, Japan and New Zealand, as
well as localized versions of hotels.com in various Asian countries. In addition, we record amortization of
intangible assets, any impairment charges and stock-based compensation expense in Corporate and Other.
We are in the process of reorganizing our business around our global brands. Our chief operating decision
makers are assessing our new structure to determine how we will manage our business and report our financial
results. Beginning in the first quarter of 2009, we expect our reportable segments to change as we will no
longer manage the business on a geographical basis.
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Expedia, Inc.
Notes to Consolidated Financial Statements — (Continued)